The Naked Corporation.(Books in Brief)(Book Review)

The Naked Corporation

By Don Tapscott and David Ticoll, Free Press, 2003, 348 pages List price: $28, ISBN: 0-7432-4650-0

If you're going to be naked, you had better be buff," write Don Tapscott and David Ticoll in The Naked Corporation, but they don't want to tone up your abs. They want companies to strip off secrecy and become open enterprises. Companies that get naked tend to get stronger, they argue, because that transparency is good for business.

[ILLUSTRATION OMITTED]

Tapscott and Ticoll say transparency goes far beyond the required financial reports companies must file. Transparency means people have "unprecedented access" to operational and performance information they never saw previously, largely thanks to the Internet. Employees can air information and gripes; shareholders can investigate the company's real worth; customers can compare products; activists can research firms' environmental or labor problems.

With information in hand, "Stakeholders other than shareholders are gaining power, and that means that firms must take them into account to do well," note Tapscott and Ticoll, authors of the best seller Digital Capital: Harnessing the Power of Business Webs (Harvard Business School Press, 2000).

A how-to section on being open outlines levels of transparency, from simple compliance with laws to real openness that sees transparency as a competitive edge. Tapscott and Ticoll cover how corporate governance, reporting standards and business leaders play roles in the open enterprise. They give a detailed study of how one pharmaceutical firm embraced openness in the face of public controversy over its positions on genetic modification, stem cell research and animal testing.

The authors also cover how:

* Transparency creates a power shift in favor of employees. Today's knowledge workers want--and open employers give--information from salary data to product strategies. Information empowers employees to take action.

* Openness with employees builds loyalty; a close-mouthed culture breeds discontent. Arthur Andersen's culture in the 1990s discouraged any discussion of failures and ended up ruining the firm, Ticoll and Tapscott say. At Prudential Securities, a conscious attempt to be open helped reduce attrition even during salary cuts.

* Whistleblowing won't disappear but wouldn't be needed if employers truly were open. Employers should provide safe forums for employees to raise concerns, such as hotlines run by third parties.

* Customers know more about companies and their products than ever. Many are willing to punish companies that don't share their values by refusing to buy their products.